Q My partner and I currently own a property in Manchester. We purchased the house in 2018 and the value has risen from £150,000 to £200,000. I have been offered a job in London and will be moving there in three months with my partner. We can’t afford to buy in London, so we would like to rent out our house in Manchester to cover the mortgage. This is to ensure that we can stay on the property ladder. What kinds of fees and taxes can we expect to pay? And would there be any implications if and when we come to sell the house?
LG
A The first thing you need to do is ask your mortgage lender whether it will give you permission to rent out your house. If it will, there may be a modest fee for its “consent to let”. However, if letting your house is a complete no-no in your lender’s view, you will probably have to switch to a buy-to-let mortgage. However, this will be possible only if the loan (ie what is left on your current mortgage) represents less than 75% of the current value of your home. In addition, the rent you get on it needs to be at least 125% the mortgage you pay. This is not based on wishful thinking but on an assessment by a professional lettings agent, who will tell your prospective lender whether you are likely to achieve that level of rental income. If it doesn’t, one option would be to switch from a repayment mortgage to an interest-only one, which makes the monthly payment lower.
